Nokia CEO Elop: Company Must Make 'Radical Change'

By Michelle Maisto |
Posted 2011-02-09

It's
time for a "radical change" at Nokia, new
company CEO, Stephen Elop emphatically insisted in an internal note to employees, posted Feb. 8 by Engadget and reviewed by the Wall Street Journal. A Jerry
McGuire-style, 1,200-plus-word
manifesto, the document arrives just days before Elop's Feb. 11 date with
investors in London, where he is scheduled to detail his plans for turning
around the phone maker, which last quarter lost
its long-held title as the world's
leading smartphone platform to Google's Android.

In the document, Elop offers an anecdote of a
fisherman forced to choose between the burning platform he's standing on and
the frigid, dark waters of the North Sea. Circumstances caused by Nokia's
own poor decisions have put the company in a position, the document suggests,
where it similarly must either do something previously unthinkable or else be
consumed.

"How
did we get to this point? Why did we fall behind when the world around us
evolved?" Elop said in the document, continuing:

This is what I have been trying to understand. I believe at least some of it
has been due to our attitude inside Nokia. We poured gasoline on our own
burning platform. I believe we have lacked accountability and leadership to
align and direct the company through these disruptive times. We had a series of
misses. We haven't been delivering innovation fast enough. We're not
collaborating internally.
Nokia, our platform is burning.

Elop goes on to explain how Apple
came to change the game and now commands its highest end, as well as how Google's Android, in just two years,
similarly grabbed a great portion of the market's high end and is now
focused on midrange products. ("Google has become a gravitational force,
drawing much of the industry's innovation to its core," Elop said in
the document.) Additionally, Chinese
vendors, helped by MediaTek, are churning out devices to emerging markets-stealing Nokia's bread and butter.

"The
truly perplexing aspect is that we're not even fighting with the right weapons.
We are still too often trying to approach each price range on a
device-to-device basis," Elop wrote, adding:

The battle of devices has now become a war of ecosystems,
where ecosystems include not only the hardware and software of the device, but
developers, applications, e-commerce, advertising, search, social applications,
location-based services, unified communications and many other things. Our
competitors aren't taking our market share with devices; they are taking our
market share with an entire ecosystem. This means we're going to have to decide
how we either build, catalyze or join an ecosystem.

Nokia
has been steadfast in its support of the Symbian operating system, which has
steadily lost popularity and market share to Android and Apple's iOS. A
year ago, at the 2010 MWC (Mobile World Congress) in Barcelona, Nokia announced support for an additional OS
called MeeGo-an amalgam of its Maemo and Intel's Moblin.
With the 2011 MWC approaching, however, it has yet to release a smartphone
running the platform.

Is
it time for Nokia to acknowledge Android's winning formula and get on
board? Or, as rumors have suggested, team up instead with Microsoft?

"This
is one of the decisions we need to make," Elop wrote. "In the meantime, we've lost market
share, we've lost mind share, and we've lost time."

It
was expected that Nokia would finally introduce its first MeeGo smartphone at
MWC, which begins Feb. 14. However, Reuters-citing two sources "close to" Nokia-reported Feb. 9 that the company "stopped developing its first smartphone using the MeeGo operating
system."

The
Nokia document similarly suggests an issue
with product development. "We have some brilliant sources of innovation
inside Nokia, but we are not bringing it to market fast enough," it
states. "We thought MeeGo would be a platform for winning high-end
smartphones. However, at this rate, by the end of 2011, we might have only one
MeeGo product in the market."

The document seems to indicate that in Elop, the
company may finally be in the good hands of someone who recognizes the
direness of its circumstances. The remaining question, now, is if he can identify an alternative to the "burning platform" quickly enough.

"We
are working on a path forward-a path to rebuild our market leadership.
When we share the new strategy on February 11, it will be a huge effort to
transform our company," Elop wrote. "But, I believe that
together, we can face the challenges ahead of us. Together, we can choose to define
our future."